The robo-investing and the robo-advising market keeps growing here and around the world. Here are some recent news stories in our market.

Not Just for Millennials

Canada’s Globe & Mail reports that the average age of the Canadian robo-investing client is 44 years old. In the U.S., 48 percent of clients are over 36 meaning they are Generation X and older. One of the Canadian robos, Responsive Capital Management, has an average client age of 50, highest of the 14 operators in Canada.

Our Take: This is no surprise to us as we have clients across different age groups and, other than being accredited investors, they are a pretty diverse group. With Gen X so familiar with technology, we expect they would like the robo-investing platforms. Millennials like robos too, as this Schwab piece looks at a poll where 54% already use a robo-advisor and up to 25% more would be willing to do so.


Aviva Goes Robo

Aviva Investors Logo


Aviva bought a majority stake in British robo-investor Wealthify. CNBC reports the Welsh startup targets millennials for ISA investing,  the UK equivalent of an IRA here. Aviva, whose primary businesses are insurance related will integrate Wealthify into their MyAviva app.

Our Take: We will see more of this where well capitalized traditional finance companies like an insurer partner with a robo-investor firm for their mutual benefit. We expect to see separate formalized partnerships as well as acquisitions and direct investments like this. The robo gets capital and a new customer base and the insurer gets a new line of business and better technology for their customers. A win/win.


Blooom Hits $1 Billion Assets Under Management

Bloom Logo


Our friends at Crowdfund Insider report that robo-advisor Blooom now has $1 billion in assets under management. The Kansas firm got to $1 billion sooner than Betterment and nearly matched Wealthfront in time to this important milestone. The company charges $10/month for the management of 401k or 403b accounts.

Our Take: The power of technology along with not being caught up in traditional old-line thinking allows robo-investors to do more with less. It’s a great accomplishment that a firm that targets the ‘traditionally unhelped’ is able to get so many assets to manage so quickly.


Banks Investing in Robo Internally

Bloomberg reports that banks are getting into the robo market. Morgan Stanley, Chase, and Goldman are all looking at ‘digital enhancements’ to their wealth offerings aka robo-investing. While fintech and direct bank investments are growing, funding for startups is down 49% from Q2 according to a CB Insights report.

Our Take: We’ve seen banks and robos, and all of fintech, work together in one of 3 ways: Build, Partner or Buy. The Aviva story is a buy and this one is about those looking to build. Some will be successful at building from within and others will go the partner or buy direction. Banks are using their big capital advantage to enter the robo-investing market.


Is the Largest Robo-Investor Getting TOO Big?

It’s easy to think of Robo-investing as a brand new innovation to finance and there are many firms that are new and innovative, including what we do here at AlphaFlow. However, there’s one firm that has been doing robo-investing since way back in 1976: Vanguard. Their index funds are passive robo-investment.

They’ve been so successful at it that they have a new problem. Are they too big? Vanguard’s legendary founder John Bogle thinks the company may be too large. This ThinkAdvisor piece is an interview with Bogle where he talks about how mutual funds have specific concerns on how much stock they own thanks to the Investment Co Act of 1940, although Vanguard owns only 2.4% of their largest holding, Apple.

Our Take: None of the fintechs in our space have been around long enough or are large enough to become potential victims of our own success like Vanguard. At 2.4% ownership of Apple, there is still room for them to grow before ownership stakes are too large or they are able to move markets with their decisions. Vanguard’s low fees, service, and growth in AUM are a testament to the success of robo-investing at the stock index level.


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